House prices on the downturn again: FNB

House prices on the downturn again: FNB

After a brief uptick around mid-year.

Johannesburg, Dec 1 (I-Net Bridge) - House price growth is on the downturn once again, after a brief uptick around mid-year according to FNB's House Price Index.

The November average house price was still 3.2% higher than November a year ago (year-on-year), but this represents a slower growth rate than the October revised year-on-year growth rate of 4%, and represents the third consecutive month of slowing year-on-year house price growth.

The average price of homes traded, according to the FNB House Price Index, was R804,242.

In real terms (prices adjusted for general consumer price inflation) the October FNB House Price Index declined by -1.9% year-on-year (November consumer price data not yet available), with consumer price inflation of 6% in that month significantly higher than the 4% nominal year-on-year growth in house prices.

FNB said that the latest data point now meant that, in nominal terms, the average house price in real terms was -16.6% lower than its long term peak reached in February 2008, a significant correction to date.

In nominal terms, the index was a marginal +5% higher than it was in February 2008.

However, compared to July 2000 when the index started, the average price at November 2011 was 209.5% higher in nominal terms, and 63.8% higher in real terms.
On a month-on-month basis, the seasonally-adjusted FNB House Price Index showed the residential market to already have been in a state of nominal price decline (negative growth) for the past 4 months.

In November, the extent of this price decline on October was -0.74%, which was slightly less decline than the revised -0.89% measured in October. Since the seasonally-adjusted price decline started four months ago, the total decline had been -2.3%.

Makro`s distribution centre to be expanded

Makro`s distribution centre to be expanded

Investec Property on Tuesday said it had secured the development rights for Makro's distribution centre in Midrand, north of Johannesburg.

The distribution centre is to undergo a massive refurbishment and development that will see the existing premises expand from approximately 16,000 square metres to 27,000 square metres.

Investec Property is a division of Investec Bank (INP, INL) and one of SA's leading property operations.

Makro, which operates within Massmart's (MSM) Masswarehouse division, required an expanded facility for its central distribution centre, ideally without having to relocate, as well as being able to keep the facility fully operational during the construction period.

Investec Property, through its relationship and engagement with the tenant and the existing owner of the property were able to provide a creative and entrepreneurial solution to meet the client's exact needs, it said.

The current distribution centre will be transformed into a modern facility and will include an additional 11,000 square metres of warehousing space.
Improvements to the site will include an expanded yard area and a new perimeter ring road to facilitate more efficient vehicular movement.

The fire control systems and sprinklers will also be upgraded during this process maintaining a strong focus on safety.

"We were able to provide a long term warehousing solution to accommodate Makro's requirements. We are proud of our contribution to this important development for one of SA's major retail groups," Investec Property's David Rosmarin said.

Doug Jones, Masswarehouse commercial director, said it was particularly important for the group that its current operating capacity was not compromised during the building phase, so that it could continue to ensure that its customers' needs were met without interruption or unnecessary cost.

Construction has commenced on the facility, which will be delivered by the end of July next year.

Where to for property in 2012?

Where to for property in 2012?

No one could claim that the South African property market has done well in 2011. Sellers are finding that their estimated prices need to be lowered; buyers are eager but struggle to buy with banks hesitant to approve home loans. The result is that the market suffers and speculation is rife as to how long this downturn will last.

While the debate is relevant it is only so in the short term. This is because property really is a long term investment and seen from this perspective the current market down-turn takes on a different level of importance.

One mustn't forget that for most South African households owning a home equates to a good investment and stability which in the long term is not overly affected by the international drama. Consumers being transferred or being in need of up or downgrading or all the other good reasons for buying or selling, can do so under any market conditions. For the run of the mill property owner life goes on, for the investor the short term market remains depressed.

Those buyers who plan to sit on their newly purchased properties for the next four to six years will not be overly affected by the current property maelstrom. It also remains true that while the property market fluctuates in the short term, long term prices continue to increase. As such, those in the know still recommend buying, if you can afford it now and you can afford to sit on the property for a period.

That being said, the current market has far from recovered. It is a seriously ill patient. All indications are that the patient will recover - given the right medication such as the government's R1 billion mortgage-backed insurance fund. The National Housing Finance Corporation (NHFC) chief executive, Samson Moraba, confirmed last week that the fund will be operational by October 2012 and will aim to galvanize banks into approving more home loans.

While it is true that our banks were largely exempt from the international banking woes the current global situation has made them more skittish than usual. The insurance fund will hopefully ease their concerns through mitigating the risk to banks by being "a wholly owned subsidiary of the NHFC but registered, licensed and regulated by the Financial Services Board in terms of compliance with the regulations and its solvency requirements", says Moraba (as quoted in a Business Report:)

According to the same report Marius Marais, the chief executive of First National Bank (FNB) Housing Finance, is of the opinion that the fund could decrease the cost of mortgage insurance as all mortgage bonds would be pooled into one and the risk shared on a bigger portfolio base.

Other positive indicators are: the downward trend in the ratio household income versus debt which peaked at 82% but is now in the upper 70%. This is a positive sign but is still far too high (although much better than most first world countries at present!). The patient is getting the right treatment - household debt is coming down and the interest rates are stable.

There is however a few risk factors that need to be dealt with. Firstly the fact that the current international, financial crisis looks to be far from over with analysts and citizens alike waiting with baited breath to see if Italy will be able to make its debt repayments.

Secondly, we have our own political hot pot brewing with the leadership struggles in the ANC which are set to intensify in 2012. Anyone who witnessed the impact of the Polokwane conference knows the potential for market unrest during this period.

All being said and done does it mean potential property buyers need to wait? Not necessarily says John Loos as quoted in Moneyweb: “it’s important, I think, in these tough times to buy well within your means. Yes, some do still believe interest rates will go up later this year or early next year and ultimately interest rates always do go up. But it’s not only about that, it’s also about all the costs being heaped on to housing, we know about Eskom and we know about municipalities. So, in these tough economic times, tough financial times, I think it’s always good to buy within one’s means if one is entering the property market.”

And that seems to be the best advice for the moment – by all means buy property yes; in the long run it will be a valuable investment. But, buy within your means and take a long term view. Investors seeking to make a quick buck might want to think twice.

*Bruce Swain is the Managing Director of Leapfrog Property Group.

Best-of-the-best in SA shopping centres revealed at the Spectrum Awards

Best-of-the-best in SA shopping centres revealed at the Spectrum Awards

Mall of the North in Polokwane, Canal Walk Shopping Centre in Cape Town, Cape Union Mart Adventure Centre at Canal Walk and Supercare Cleaning Services at Paarl Mall have all claimed top honours at the annual South African shopping centre industry awards.

The Spectrum Awards recognise excellence, innovation and service across four categories which underpin the retail centre sector in South Africa. An initiative of the South African Council of Shopping Centres (SACSC), finalists for the Spectrum Awards comprise winners of the regional Special Star Retailer and Service Provider Awards, the Footprint Marketing Awards and the Retail Design and Development Awards (RDDA).

Retail plays a vital role in the SA economy and shopping centres are at the heart of this significant economic activity. Furthering excellence in retail is of wide benefit and represents vast positive outcomes for consumers, retailers, shopping centres, service providers and the economy in general.

Mall of the North in Polokwane, Limpopo, scooped the prestigious Spectrum Retail Design Development Award, much to the delight of architect MDS Architecture and the centre’s joint owners and developers, JSE-listed Resilient Property Income Fund, Flanagan & Gerard Property Development & Investment and Moolman Group. This is the second consecutive year in which the team of MDS and Flanagan & Gerard have clinched this award.

The Spectrum RDDAs recognise exceptional shopping centre design, combined with economic success, within the South African property industry. Finalists for this award included Jubilee Mall in Hammanskraal, Pick n Pay on Nicol, Eastgate re-positioning phase one and the store design of Tasha's at The Zone @ Rosebank.

Nedbank Corporate Property Finance is the principal sponsor of the RDDA awards in 2011. “We are pleased to play a role in industry events such as the RDDA Awards. This involvement allows us to celebrate the hard work that goes into property design, as this is a discipline that brings together creative and commercial elements in the design and construction of retail space to the benefit of consumers,” says Frank Berkeley, Managing Executive of Nedbank Corporate Property Finance.

Cape Union Mart Adventure Centre at Canal Walk Shopping Centre in Cape Town triumphed in the National Retailer of the Year Award, delivering first-rate service. Category finalists included Dis-Chem La Lucia Mall in KwaZulu-Natal, SuperSpar Sunridge Village in the Eastern Cape and Fruit & Veg City Food Lovers’ Market at The Wedge in Gauteng.

Holding the spotlight, Canal Walk’s ‘Snow’ marketing campaign by Marketing Concepts won the Spectrum Shopping Centre Marketing Excellence Award 2011, the hotly-contested category which celebrates excellence in shopping centre marketing.

Regional finalists from KwaZulu-Natal included ‘Sugars The Bitter Truth’ at Chatsworth Centre and ‘The Pavilion contributes towards the building blocks of education’ at The Pavilion. Wonderpark Shopping Centre’s ‘Please donate your Small/Big/Brown/Silver Change’ represented the Gauteng region. In addition to the winner, Western Cape finalists comprised ‘J&B Met 2011’ at Cavendish Square, Canal Walk ‘Gets Social’ and ‘Growsmart’ which is undertaken at four Growthpoint Properties’ centres in the province, being The Constantia Village, Longbeach Mall, Golden Acre and Middestad Mall.

Making sure that our shopping centres remain attractive and safe are the industry service providers and this year Supercare Cleaning Services cleaned up in the National Service Provider of the Year category and won the Spectrum Award for its services at Paarl Mall.

Other smart finalists in this category included Prestige Cleaning Services at Gateway Theatre of Shopping in KwaZulu-Natal, Marina Landscapers at Fountains Mall in the Eastern Cape and Life Landscapes at Lifestyle Garden Centre in Gauteng.

The strong pack of entries in 2011 an excellent indication of retail sector innovation and business savvy in South Africa. It also shows the respect in which the highly coveted Spectrum Awards are held by the industry.

*Amanda Stops is the General Manager of SACSC.

Liberty Properties to expand into east and west Africa

Liberty Properties to expand into east and west Africa - Property Moneyweb

Follows the successful launch of a $200m mall in Lusaka.

The property arm of JSE-listed Liberty Holdings (JSE:LBH) says the entity is looking to east and west Africa as possible destinations for development. Liberty Properties successfully launched a mixed use development comprising a 30 000m² upmarket mall, a 10 000m² office park and budget hotel in the Zambian capital, Lusaka, earlier this week. The Levy shopping centre is named after former Zambian president Levy Mwanawasa.

Liberty Properties’ CEO Samuel Ogbu says the company hopes to launch a project in west Africa within the first half of 2012. Ogbu said after the Zambian launch: “We’re looking at west Africa , we’re looking at east Africa. We’re looking at doing another one of these projects in Zambia, possibly in the copper belt. It doesn’t’ make sense just to do one. Zambia has been identified as one of the growth areas and we are also under pressure from retailers to grow capacity for them.”

In west Africa Liberty currently has its sights set on Nigeria and Ghana, while Kenya and Tanzania are its main focus in east Africa. “We’re not at a stage yet to tell you that a site has been identified and we’re ready to go. We need to be very cautious of who our partners are because the one thing we are not willing to do is to compromise on delivery,” Ogbu said.

The CEO said that further developments in Africa will be based on the Levy model but will obviously be tweaked in line with the needs of the destination chosen. “We want to build capacity which is actually cheaper in the long run than to keep flooding the place with expats. You do need the expatriate expertise to start, and you do need to ensure the standards are complied with and at times it does take time to build capacity. South Africa does add value but for it to be sustainable, you need local partners to play an active part.”

Liberty’s first foray into Africa was indeed a learning curve for it and other stakeholders, and the approach was unique. The aim was to build a facility in line with the needs of the community together with the input of local businesses and local authorities. It wasn’t all plain sailing as Ogbu explains: “We were very hands on and was guided by the client (funder, Zambia’s National Pension Scheme Authority). We were dealing with a different set of rules. Local authorities are set up to protect their citizens. Wwe had to learn their rules and make sure we complied with them.”

The realities of Africa and its lack of infrastructure also impacted the Zambian project as the arrival of goods for some tenants were delayed for five weeks due to border problems. Shipments were stuck at the Zimbabwean border due to computer glitches. Trying to get the goods through via Botswana also experienced problems. Shrugging his shoulders, Ogbu says: “I’ve learnt a new phrase: just roll with it.”

Another encouraging element of the Levy project was the partnerships formed between South African professionals and their Zambian counterparts, which was a prerequisite of the funder. Ogbu explains: “It worked through the procurement process and was part of the tender process. We made it clear it was not a question of merely getting a local face to a South African provider. There had to be effective input from a local partner, which meant that local partner had to have the capacity to deliver. It made the process longer and it made it a bit frustrating at times, but in the long term it leads to a much better result. It leads to a true transfer of skills and building capacity in the local market which I think is essential for a sustainable offering and is the difference between the approach that makes you welcome and not an intruder.”

He says the journey for some of the South African contractors had not been easy: “The temptation is there for the skilled South African partner to say stand aside, let me do it. But we said no, no, no, you’ve got to take that person along with you.”

In instances where there were differences of opinion on building techniques, Ogbu said: “If it’s the way they build there, you have to persuade them why yours is better. Even in the design phase there was a problem when it became clear local capacity was inadequate. We said okay let the South Africans do it, but we had to find a way to skill them.”

The mall manager is Zambian with a technical back-up team of South Africans who are partnering with locals who will eventually take over the running of the facility.

On a lighter note, Ogbu says cultural differences also provided several challenges notably when stakeholders were invited to a “roof wetting”. “We had to explain what it was before they would come.”

Ogbu says what is clear is that Africa is hungry for an upmarket shopping experience.